When will the Bribery Act come into effect?
The new UK Bribery Act was passed by Parliament on 8 April 2010, inspired by BAE Systems' Saudi dealings, but the Order needed to bring the Act into force has not yet been made. The coalition Government has indicated it supports the legislation and the Act will be brought into force in April 2011.
How has the law changed?
Until now, English bribery law has been essentially a patchwork of judge-made law and ancient statutory offences. The system was widely seen as unsatisfactory and attracted criticism internationally.
The new Act will abolish those old laws and introduce five new offences: giving bribes; accepting bribes; bribing a foreign public official; a new corporate offence of failing to prevent bribery; and a senior company officer offence of consenting to or conniving in bribery by the company. For each offence, prosecutors must prove the transgression has been committed "beyond reasonable doubt".
What is the scope of the legislation?
The new corporate offence will make it far easier for prosecutors to convict companies of giving bribes.
The law is broad and applies to acts of bribery committed by any associated person of the company - not just subsidiaries and employees, but agents, intermediaries and anyone acting on behalf of the company in any capacity.
The Act also has a very wide geographic scope. The corporate offence applies to any companies doing business in the UK – not just UK companies – and catches acts of bribery undertaken by those companies anywhere in the world.
What is the definition of a bribe?
Broadly, the Act defines bribery as giving or receiving a financial or other advantage in connection with the "improper performance" of a position of trust, or a function that is expected to be performed impartially or in good faith.
The relevant "expectations" for these purposes are those of a reasonable person in the UK. In other words, it is no defence to argue that bribery is culturally accepted or "normal practice" in the country where it took place.
What are the penalties for contravening the law?
Individuals convicted of bribery offences face up to 10 years’ imprisonment and/or an unlimited fine. Companies convicted of having failed to prevent bribery are exposed to an unlimited fine. The courts have indicated they view bribery as an extremely serious offence and that corporate fines are likely to be very high.
So what does this mean for media businesses?
The Act is very widely drafted and relies on prosecutors exercising their discretion about when to bring charges. This means the Act applies not only to obvious acts of bribery, but can also apply to practices such as excessive corporate entertainment, which the industry may not necessarily think amounts to a bribe.
There is a lot of expensive corporate entertainment in the media industry, and companies will have to evaluate whether it is appropriate in the circumstances or risks inducing the recipient to act improperly – such as awarding business that would not otherwise have been won on that company’s merits. Particular care will need to be taken if public officials are recipients of corporate hospitality.
Could media companies be prosecuted for rebates or kickbacks?
Media owners and media agencies will also need to take care that rebate payments and incentives contained in media deals comply with the law.
Media owners should ensure that payments or other advantages given to agencies do not cause those agencies to act improperly in allocating advertising spend. Agencies must ensure they are not improperly influenced by those benefits. In particular, they must make sure they are abiding by their duties to their advertiser clients and not making secret profits from their accounts.
And what about newspapers paying sources for stories?
Newspaper publishers and other news agencies may also be concerned that the Act appears - at least on its face - to be capable of applying to payments made to sources of news stories, where the information disclosed to the newspaper in return for the payment involves improper performance by the source of their duties, for example by breaching obligations of confidentiality owed to their employer. It is questionable whether this was an intended consequence of the Act and it remains to be seen what approach prosecutors will take.
What measures do media companies need to put in place?
A company charged with failing to prevent bribery has a defence if it can show it had "adequate procedures" in place, which were designed to prevent those people associated with the company from undertaking bribery.
The Act requires the Government to publish guidance on procedures companies can put in place to prevent bribery, but that guidance has not yet been published and – even when it is – is likely to be abstract and high-level.
So media companies need to carry out a detailed assessment of where bribery risks may arise, and then put clear anti-bribery policies and internal guidelines in place. These documents must be supported by a commitment by senior management to implement and monitor compliance with the rules.
There should also be guidelines for undertaking due diligence on potential business partners or acquisition targets to establish whether they are a bribery risk, and training should be provided where appropriate.
What are the long-term implications for the media industry?
The Government intends the new Act to establish the UK as an international leader on anti-bribery enforcement.
It is a stringent new regime and the prosecuting authorities have made clear their intention to pursue cases vigorously.
High-profile sectors such as the UK media industry, which are characterised by high use of agency negotiations and financial incentives, are likely to be in the spotlight. The consequences of non-compliance will be serious and media companies must act now to ensure their houses are in order.